“The need for radical change is clear.”
Fighting words from Network Rail’s new CEO Andrew Haines this week as he announced his big plans for devolution within the organisation.
At an industry event I attended not too long ago, Haines declared that, from his perspective, Network Rail was first and foremost a service company. His view was NR is not an asset management company, or a capital projects company, or an engineering company, but one that provides a fundamental service to the whole country.
It’s therefore unsurprising that the new operating model aims to align the passenger with train operators for a more cohesive railway, with quicker response times and less bureaucracy.
At the moment Network Rail operates as 8 different routes; each with their own MD reporting directly to Haines (following COO Phil Hufton’s departure last September) and a large central team in Milton Keynes. Under the new model, the 8 routes will increase to 13, and these will fit within five Network Rail regions, each led by a Managing Director.
These will be Scotland, Wales & Western, London North Western, Southern and Eastern.
Each of the 13 routes will have responsibility for delivery of its operations, maintenance and renewals. They will also be in charge of the day to day delivery of train performance and will work closely with the local TOC’s.
These are all major changes, but what’s most interesting from our perspective, is that a number of previously centralised services and functions will also be devolved to region or route level. Including Infrastructure Projects, commonly known as IP.
While Network Rail haven’t released a huge amount of detail on what the devolution of IP will actually entail, this could mean that rather than Network Rail being one unified national infrastructure client, we could likely be regarding them as 5 different regional infrastructure clients.
Although the current 8 routes may take slightly different approaches to projects, they are all broadly similar. These new changes could mean that they all have differing views, develop different strategies, and therefore have different requirements.
So what does this mean for the wider industry and supply chain?
Staff numbers at Network Rail have grown by over 5500 people in the last 6 years to just over 40,000 employees. Haines’ predecessor Mark Carne promised to reduce the number of staff at the Milton Keynes Head office to under 2000 by the end of his tenancy.
This didn’t happen. So we can expect that this restructure will lead to some job losses across the company.
For the rest of the industry, this is an opportunity to snap up candidates with solid rail and client side experience.
2. More opportunities
The devolution of IP is a great opportunity for the private sector. There will be 5 potential rail customers for contractors and consultancies to work with on key projects.
More importantly, the regions will have their own requirements for projects and more control over what they invest money in.
This means that the priorities centralised teams may have favoured could vary per region. Companies who might not have fitted the mould for IP, could now build a relationship with a specific region they are strong in.
3. Better decision making
The debate over centralisation vs devolution is one that will rage on until the end of time, and different companies, sectors, business challenges, will compliment one more than the other.
TfL for example are currently in the process of doing the exact opposite of Network Rail and have brought devolved functions back into more centralised teams.
But for Network Rail, a truly vast organisation spanning the entire country, it seems logical that power be given to the people actually out in the region who have the local knowledge.
Devolution should mean that decisions will take into account what the passengers and TOC’s actually using these routes want and need from Network Rail. As opposed to standardised decisions that may not be the best solution for each route.
A prime example of this is the timetabling debacle last year. If the Route MD’s had full control of their timetable and the power to decide when and how the changes went live, perhaps the transition would have worked a little smoother.
If nothing else, there will be clear lines of responsibility and MD’s will be more accountable for future decisions.
What do you think of the restructure?